Bangladesh Krishi Bank: Providing Financial Support to the Agricultural Industry

Overview

Bangladesh Krishi Bank (BKB) is a fully government-owned specialised bank in Bangladesh, established in 1973 to finance the country's agriculture. It is the largest specialised bank in the country and the principal state channel for institutional farm credit, lending to crop farmers, livestock and fisheries producers, agro-processors and rural cottage industries. Although it is a specialised institution, it also performs ordinary commercial banking — taking deposits, handling foreign exchange and trade finance, and delivering remittances — under the supervision of Bangladesh Bank.

The bank's defining feature is its physical reach. With 1,038 branches in 2025 — more than any other bank in Bangladesh — it maintains a presence in farming communities that no private bank attempts to serve, and in 2025 it collected USD 3.13 billion in remittances from migrant workers, the second-highest total of any bank in the country. Yet its balance sheet tells a harsher story: after decades of policy-directed lending and weak recovery, BKB is deeply insolvent on paper, with negative equity of Tk 27,492 crore in its audited accounts for the year ended 30 June 2025. Its head office is at Krishi Bank Bhaban in Motijheel, Dhaka.

History

Bangladesh Krishi Bank was established under the Bangladesh Krishi Bank Order, 1973 (President's Order No. 27 of 1973), issued on 31 March 1973 and deemed effective from 16 December 1971, the day of Bangladesh's victory in the Liberation War. The new bank took over the undertakings of the Agricultural Development Bank of Pakistan, itself formed in 1961 by merging the Agricultural Development Finance Corporation and the Agricultural Bank of Pakistan. A managing director took charge in April 1973, a board of directors was constituted in March 1975, and the posts of chairman and managing director were separated in April 1981. According to the bank, commercial functioning began in 1977, as it started mobilising rural and urban savings to fund its lending.

The bank's territory was reduced in 1986, when the Rajshahi Krishi Unnayan Bank Ordinance created a separate agricultural bank, RAKUB, for the Rajshahi region (today the Rajshahi and Rangpur divisions). BKB has since served the rest of the country. Its branch network kept growing regardless: by 2009 it had 952 branches, already the largest network of any bank in Bangladesh, and it passed one thousand branches in the following decade.

From 2018, under managing director Ali Hossain Prodhania, the bank began signing its own agreements with international money-transfer companies and using its rural network to capture remittances directly, rather than merely distributing other banks' transfers for a small fee. The strategy transformed its remittance business within a few years. Following the change of government in 2024, the interim administration replaced the bank's managing director in October 2024, and a new chairman was appointed in 2026, as part of a wider reshuffle of state-owned bank leadership.

Ownership and Leadership

Bangladesh Krishi Bank is wholly owned by the Government of Bangladesh. Its authorised capital is Tk 1,500 crore and its paid-up capital is Tk 900 crore, subscribed entirely by the government; its audited balance sheet at 30 June 2025 also carries Tk 650 crore provided by the government as recapitalisation. The chairman and directors are appointed by the government through the Financial Institutions Division of the Ministry of Finance, and the managing director is likewise a government appointee — a structure that has made the bank's leadership rotate with changes of administration.

As of late 2026, the chairman is Mohammed Nurul Amin, a former banker appointed by the Financial Institutions Division in 2026. The managing director is Sanchia Binte Ali, who was appointed in October 2024 by the interim government; she had previously served as a deputy managing director of Sonali Bank. She is supported by deputy managing directors Md Abdur Rahim, Mohd Khaleduzzaman and Abu Sayed Md Rowshanul Haque, as recorded in the bank's October 2026 reporting.

Products and Services

BKB's lending is organised around the agricultural calendar. It provides short-term seasonal loans for crop production; medium-term loans of up to five years for farm machinery, irrigation pumps, agricultural implements, dairy and poultry farming and livestock; and long-term loans for tractors, power tillers, tube wells, ice plants, agro-based industries, horticulture, forestry and fisheries. It also finances agro-processing and cottage industries, provides working capital to small and medium enterprises, and runs microcredit and poverty-alleviation lending. Its charter requires it to give preference to small farmers and disadvantaged groups, and it lends to sharecroppers on easy terms. About 65 per cent of the bank's own lending is agricultural, and under Bangladesh Bank rules its crop loans are available without collateral for cultivation of up to five acres.

The bank also delivers credit under government-backed concessional schemes, including loans at a 4 per cent interest rate for cultivating pulses, oilseeds, spices and maize, 4 per cent loans for salt cultivation in coastal areas, and 5 per cent loans for farmers in the hill districts, programmes that continue into FY2026–27 alongside the agriculture allocations in the national budget (see the FY2025-26 agriculture budget). More broadly, BKB is the largest single implementer of Bangladesh Bank's annual Agricultural and Rural Credit Policy: in FY2025–26 the three specialised banks — BKB, RAKUB and Probashi Kallyan Bank — together disbursed Tk 12,616 crore against a target of Tk 10,223 crore, an achievement of 123.4 per cent, the highest rate of any group of banks. For FY2026–27 the central bank raised the system-wide farm credit target to Tk 60,000 crore, of which state-owned specialised banks are to provide Tk 13,554 crore.

On the deposit and payments side, the bank offers savings, current and fixed deposit accounts, savings schemes aimed at small rural savers, government savings instruments, locker facilities, utility bill collection and automated challan services for government payments. Through authorised-dealer branches and agreements with overseas exchange houses, it handles trade finance and pays out remittances to beneficiaries across its rural network.

Branch Network and Outreach

BKB operates the largest branch network of any bank in Bangladesh: 1,038 branches and five sub-branches as reported in 2025, spread across 48 districts — the whole country except the Rajshahi and Rangpur division districts served by RAKUB. Around 85 per cent of its branches sit in rural areas, many at union level, giving it a presence in markets and villages where it is frequently the only bank. All of its branches are computerised and offer online, any-branch banking, and field operations are supervised through divisional, chief regional and regional offices.

This network is the foundation of the bank's two great functions. For farmers, it is the delivery channel for seasonal credit, government subsidy-linked lending and, in 2026, the government's farm-loan waiver. For migrant workers' families, it is a payout network for remittances in remote areas — the advantage bank officials themselves cite for the bank's rise to become one of the country's top two remittance collectors, overtaking much larger commercial banks.

Financial Performance

BKB prepares its accounts on a fiscal-year basis ending in June. Its audited financial statements for FY2024–25 (signed in September 2026) show a bank whose lending operation loses money before bad loans are even counted. At 30 June 2025 the bank had total assets of Tk 47,803 crore, deposits of about Tk 50,700 crore and loans and advances of Tk 38,631 crore. Interest expense of Tk 3,656 crore exceeded interest income of Tk 2,697 crore, leaving net interest income negative by about Tk 959 crore, and the bank recorded an operating loss before provisions of Tk 1,934 crore. After provisions of Tk 6,285 crore — most of it against loans — the net loss after tax was Tk 8,257 crore, up from Tk 6,513 crore in FY2023–24. The bank had also lost money in each of the preceding four years, taking its cumulative net loss over six years to roughly Tk 20,000 crore.

The consequence is a hollowed-out balance sheet. Owners' equity at 30 June 2025 was negative Tk 27,492 crore, the accumulated deficit stood at Tk 29,886 crore, the capital adequacy ratio was negative 133.08 per cent against a required minimum of 12.5 per cent, and the capital shortfall was Tk 29,860 crore. The auditors issued a qualified opinion, noting among other things that no provision had been made against an actuarially assessed pension-fund deficit of Tk 5,261 crore.

There have been partial improvements since. Deposits grew to about Tk 57,900 crore by June 2026, although much of the growth came from expensive deposits that squeezed margins further. Classified loans, which had spiked to Tk 17,538 crore (49.44 per cent of all loans) in June 2025 after Bangladesh Bank tightened loan-classification rules, fell to Tk 15,186 crore — about 38 per cent of loans — by June 2026 after Tk 2,419 crore of defaulted loans were recovered in cash. Remittance income has also become a genuine strength: collections of USD 3.13 billion in 2025 ranked second among all banks, and in June 2026 the bank ranked first for the month with USD 441.68 million.

Digital Banking

Digitally, BKB has historically lagged the private banks, but its basic electronic infrastructure now covers the branch network. All branches offer online banking, and the bank provides SMS banking, ATM and debit-card services, and transfers through the national payment systems RTGS, NPSB and BEFTN. Its published services include BKB Bangla QR payments and the automated challan system through which citizens pay government fees.

A notable step came on 27 October 2026, when the bank received a Mastercard licence — the first granted to a government-owned bank in Bangladesh — allowing it to expand card-based banking and digital payments for its customers. Bank management presented the licence as part of a broader push to make cashless services accessible to rural customers who have traditionally banked over the counter.

Challenges and Controversies

The bank's central problem is asset quality. For years its reported default rate looked manageable partly because farm loans were classified as non-performing only after six months overdue; when Bangladesh Bank shortened that period to three months in line with IMF-supported reforms, classified loans jumped from 12.72 per cent of the loan book in June 2024 to 49.44 per cent in June 2025. Bank officials contend that a three-month window fits crop cycles badly, since a farmer cannot repay before harvest, and have pressed for the longer window to be restored — a debate at the heart of whether BKB's figures reflect new distress or old distress newly recognised. Either way, the Financial Institutions Division's 2026 review identified the same structural risks: massive capital deficits, a high classified-loan ratio, continuing net losses, negative interest margins and many branches that lose money.

Governance has repeatedly been questioned. In December 2014, four bank officials faced Anti-Corruption Commission investigation over a fraudulent loan of Tk 152 crore to a restaurant owner; in November 2017 the commission sued six people, including three officers, over the alleged embezzlement of Tk 430 crore in collusion with a sweater exporter. The bank was also found to have lent Tk 1,926 crore for non-agricultural purposes between 2010 and 2013, contrary to its specialised mandate, and was ordered by the government to stop; and in 2021 the High Court demanded an explanation for a Tk 48 crore interest waiver granted to a businessman-politician. In 2025, senior officials of the bank themselves alleged in press reporting that administrative discipline had broken down amid transfer-related corruption and political infighting.

The bank's cost structure adds a quieter pressure. To fund lending, it has leaned increasingly on high-cost deposits — Tk 41,355 crore of its Tk 57,900 crore deposit base in June 2026 — which pushed interest expense above interest income and prompted the Financial Institutions Division to direct the bank to pause expensive deposit collection and rebuild cheaper deposits.

Corporate Social Responsibility

For BKB, social responsibility is not an add-on but its statutory purpose: its charter obliges it to prefer small farmers and disadvantaged borrowers, and poverty-reduction lending has always been one of its formal loan categories. It lends to sharecroppers on easy terms, operates small savings schemes for marginal savers, and has repeatedly served as the state's financial arm in rural emergencies, including the rehabilitation schemes that followed Cyclone Sidr in 2007. In 2022 it donated Tk 1 crore to the Prime Minister's Relief and Welfare Fund.

Its largest recent social intervention was as the main implementing bank of the government's 2026 farm-loan waiver, under which agricultural loans of up to Tk 10,000, including interest, were written off for small farmers nationwide. BKB wrote off Tk 604.81 crore owed by 709,679 small and marginal farmers — about 39 per cent of the national total, and more than any other bank — restoring those borrowers' access to fresh formal credit. At the same time, its own losses limit what it can spend on conventional charitable programmes: its social contribution is delivered overwhelmingly through mandated lending rather than donations.

Outlook and Conclusion

BKB's immediate agenda has been set by its owner. Following the Financial Institutions Division's 2026 review, the bank has been directed to shift towards low-cost deposits, improve its net interest margin, and execute a time-bound plan to recover defaulted loans, a process that had already cut classified loans by about 9 per cent in FY2025–26. Bangladesh Bank's sharply higher farm-credit target for FY2026–27 — Tk 60,000 crore across the banking system — guarantees the bank a growing policy role, and its government-guaranteed refinancing facility at the central bank remains in place. Its remittance franchise and the new Mastercard licence point to fee income that does not depend on lending margins.

The obstacles are equally clear. A capital shortfall of nearly Tk 30,000 crore cannot be closed from earnings by a bank that loses money at the operating level; only sustained government recapitalisation, much better recovery of old loans, or structural reform of the kind urged by commentators — one Financial Express editorial in September 2025 ran under the headline "Krishi Bank on the brink" — can restore the balance sheet. Politically directed lending and weak governance created much of the damage, and both risks persist. What is not in question is the institution's importance: more than five decades after its founding, Bangladesh Krishi Bank remains the backbone of formal credit for the country's farmers and a lifeline for remittance-receiving rural households, and its future will be decided by whether the state treats it as a bank to be repaired or a programme to be funded.